Main points of investment:

Upgrade the rating to "overweight". The company is the national brand leader of turbocharger, benefiting from the development trend of automobile energy saving. The company is a member of China Arms and equipment Group. Recently, the State Council proposed the pilot reform of central enterprises, and the company is expected to benefit from this. Taking into account the positive impact of the reform of central enterprises, the rating was upgraded to "overweight", and the target price was raised to 6 yuan, corresponding to 100 times PE in 2014 (refer to comparable companies in the military industry). Maintain the company's profit forecast with EPS of 0.06,0.07,0.09 yuan respectively in 2014-16.

Benefit from the reform of central enterprises. The controlling shareholder of the company is China Changan Automobile Group Co., Ltd., and the actual controller is China Arms equipment Group Corporation (central enterprise). Recently, the State Council held a press conference on the "four pilot reforms of the State-owned assets Supervision and Administration Commission" and proposed to carry out pilot reforms such as the state-owned capital investment company, the mixed ownership economy, and the pilot authorized by the board of directors. The curtain of the reform of central enterprises has been kicked off, which is conducive to improving the operational efficiency and efficiency of state-owned capital, and the company is expected to benefit from this.

Diesel turbocharged products grew moderately. The company's diesel turbocharger products are in a leading position in China, with sales of 650000 sets in 2013. We expect the company to maintain its existing market share and achieve a moderate increase in sales with the growth of diesel engines by virtue of its competitive advantages in cost, channel and new products.

Be optimistic about the breakthrough of gasoline engine turbocharged products. With the increasingly stringent national emission regulations and the development trend of global low-carbon economy, engine supercharging technology has become the preferred energy-saving and emission reduction technology for high-end commercial vehicles and passenger vehicles. By the end of 2013, the gasoline engine turbocharged products independently developed by the company have developed nearly 20 projects for domestic main engine factories simultaneously, and are expected to achieve mass production and supply in 2014.

Risk hint: gasoline engine turbocharged products mass production test is not up to standard, technology research and development risk.